Segment Information

9 Months Ended

Sep. 30, 2019

Note 11 — Segment Information

The financial results for our operating segments are prepared using a management approach, which is consistent with the basis and manner in which we internally segregate financial information for the purpose of assisting in making internal operating decisions. We evaluate the performance of our operating segments based on operating income, and generally account for intersegment sales based on arm’s length prices. Corporate and certain other expenses are not allocated to the operating segments, except to the extent that the expense can be directly attributable to the business segment.

Financial information for our operating segments for the quarter and nine months ended September 30, 2019 and 2018 were as follows:

	(Unaudited)
	Composite		Engineered		Corporate &
(In millions)	Materials		Products		Other (a)			Total
Third Quarter 2019
Net sales to external customers	$	448.0	$	124.5	$	—		$	572.5
Intersegment sales		23.3	—			(23.3	)		—
Total sales	$	471.3	$	124.5	$	(23.3	)	$	572.5
Operating income		100.1		20.3		(10.5	)		109.9
Depreciation and amortization		30.7		3.7		—			34.4
Stock-based compensation		1.2		0.2		1.0			2.4
Accrual basis additions to capital expenditures		51.0		2.3		—			53.3

Third Quarter 2018
Net sales to external customers	$	432.8	$	107.7	$	—		$	540.5
Intersegment sales		17.2		—		(17.2	)		—
Total sales	$	450.0	$	107.7	$	(17.2	)	$	540.5
Operating income		92.5		15.5		(11.5	)		96.5
Depreciation and amortization		28.9		2.3		—			31.2
Stock-based compensation		1.2		0.2		0.6			2.0
Accrual basis additions to capital expenditures		41.4		2.1		—			43.5

Nine Months Ended September 30, 2019
Net sales to external customers	$	1,419.7	$	371.7	$	—		$	1,791.4
Intersegment sales		64.0		0.1		(64.1	)		—
Total sales	$	1,483.7	$	371.8	$	(64.1	)	$	1,791.4
Operating income		324.4		51.4		(48.0	)		327.8
Depreciation and amortization		95.7		11.3		0.1			107.1
Stock-based compensation		6.4		1.4		8.1			15.9
Accrual basis additions to capital expenditures		156.8		4.1		—			160.9

Nine Months Ended September 30, 2018
Net sales to external customers	$	1,323.2	$	304.9	$	—		$	1,628.1
Intersegment sales		56.7		—		(56.7	)		—
Total sales	$	1,379.9	$	304.9	$	(56.7	)	$	1,628.1
Operating income		276.6		41.3		(42.5	)		275.4
Depreciation and amortization		83.9		6.8		0.1			90.8
Stock-based compensation		5.7		1.0		7.3			14.0
Accrual basis additions to capital expenditures		130.1		3.4		—			133.5

(a)

We do not allocate corporate expenses to the operating segments.

Goodwill and Intangible Assets	Composite			Engineered
(In millions)	Materials			Products			Total
Balance at December 31, 2018	$	98.2		$	44.1		$	142.3
Amortization Expense		(1.6	)		(3.8	)		(5.4	)
Additions		—			145.1			145.1
Currency translation adjustments		(2.6	)	—				(2.6	)
Balance at September 30, 2019	$	94.0		$	185.4		$	279.4

The addition to goodwill and intangible assets is due to the acquisition of ARC Technologies LLC, discussed in Note 13. At September 30, 2019, the balance of goodwill and intangible assets was $187.8 million and $91.6 million, respectively. No impairments have been recorded against these amounts.